Market Information for Buyers and Sellers of Toronto area real estate

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Real Estate 2017

This article contains a podcast which takes a look at real estate 2017 in Mississauga and surroundings. There is a review of sales activity and prices in 2016, plus a look forward to what to expect in 2017.

Update: the Toronto Real Estate Board reported 5,188 residential transactions through the MLS system in January 2017. This was an increase of 11.8% per cent compared to the 4,640 sales that were reported in January 2016. Condos showed a higher sales growth than low-rise homes.

January 2017 was basically an extension of 2016. Sales increased on a year-over-year basis while new listings was down dramatically for most major home types.

It’s pretty clear that owning a home continues to be a great investment and remains very important to many households in Canada. As we move forward through 2017, we expect the demand for ownership housing to remain strong, including demand from first-time buyers who, according to recent surveys, could account for more than half of transactions this year. Many of these potential buyers will have problems finding a home that meets their needs in a market with an extreme shortage of inventory for sale. Prices are at record highs. In the last twelve months, the average selling price of all housing types was up by 22.3 per cent to $770,745, with dramatic increases in the average prices for all major home types.

Biggest problem for the industry – the number of active listings on the MLS system at the end of January was essentially half of what was reported as available at the same time last year. That statistic, on its own, tells us that there is a serious demand and supply imbalance in the Greater Toronto area: a problem that we expect will continue throughout in 2017. The end result will be strong price increases for all home types again this year.

So can we expect the great boom in Canadian real estate to continue? Find out here:

Questions: with prices up a staggering 22.3% per cent in 2016, can the bull market continue? How much higher can house prices go in Toronto, where the average price for a detached home is now over $1 million dollars? Will interest rates rise? What about world politics – will they affect the local Canadian market? What about condos? Just a few questions to consider.

portions of this report first appeared in the Toronto Real Estate Board Market Watch publication

MORTGAGE RULE CHANGES for CANADA

Important mortgage rule changes for Canada took effect on October 17, 2016. These government mandated changes make it harder for buyers who have less than 20% down payment to qualify. Some of the changes include:

only apply to buyers with less than 20% per cent down

only applies to purchases (not re-financing)

must now qualify at the Bank of Canada rate – currently 4.64%, which is significantly higher than the posted, or contract rates

Canadian government is branding this as a “Mortgage Rate Stress Test”

existing mortgage commitments are grandfathered into the previous scheme, although closings must take place before March 1, 2017

additional changes include certain low ratio mortgages with 20% down payment will still require mortgage insurance, and will now need to qualify at the higher rates

Canadian citizens will now be required to disclose the sale of their “primary” residence on the income tax forms. Even though now tax may be payable, the sale must still be disclosed

no changes yet for foreign resident buyers, although there is a distinct possibility that there may be substantial changes here as well

Effect on Real Estate

There has been a lot of discussion on the internet regarding these mortgage rule changes. Here is one video which goes into some detail regarding the October 17 changes:

There is a complete transcript of the video which provides a pretty good summary of the changes.

Slowing Down the Market

So you can see, the Government of Canada is making some radical moves to slow the real estate market in this country. Short of raising interest rates, they are doing everything they can to slow the market, with intent to dampen the price rises in primary cities such as Toronto and Vancouver. It remains to be seen how effective these strategies will be, but we watch them with interest going forward.

Canadian New Home Construction August 2016

New home construction activity in Canada continues to be one of the healthiest components of the national economy. Housing starts have defied predictions of a soft landing, and national housing starts throughout the first seven months of the year have trended around 200,000 annual units (chart 1).

The trend in building permits is only modestly lower at 190,000 units, pointing to continued strong activity over the remainder of the year. Housing starts are now expected to total approximately 195,000 units this year, very similar numbers to 2015.

British Columbia Leads

As with virtually all national economic indicators, there is a big and obvious regional divide in residential construction. British Columbia is the strongest province, with housing starts averaging a record-setting 44,000 annualized units this year, a 40% jump over 2015. While led by multi-unit construction (both condos and purpose-built rentals), single-family home construction also has picked up. B.C.’s residential construction boom extends beyond Vancouver and the Lower Mainland into other parts of the province, including Kelowna and Victoria. As of the date of this article, full impact of the new offshore resident tax, which was announced on July 25, has not yet been assessed.

Continued Strength in Ontario

Multi- and single-family construction also has picked up pace in Ontario this year. However, at an annualized 76,000 units year-to-date, the overall level of housing starts remains shy of a record. Activity remains extremely strong in Toronto, but a considerable amount of momentum has shifted to lower priced localities, including Hamilton, St. Catharines, Kitchener, Guelph, and London.

Alberta Home Construction Stabilizing

Construction activity in Alberta is showing early signs of stabilizing, although at levels well below historic averages. Provincial starts have totaled just 24,000 annualized units year-to-date, their lowest level since 2009, with notable pullbacks in both Calgary and Edmonton.

Activity in most other parts of the country remains relatively steady. There are signs of overbuilding in a few provincial markets, notably in Alberta, Saskatchewan and Newfoundland where home sales have slowed. For the most part, however, there is little evidence of any serious inventory problems.

Despite ongoing high levels of home construction activity, unsold housing inventory as a share of the adult population remains consistent with historical averages (chart 2).Absorption rates of recently completed units remain healthy and stable. The continued strength in new and resale home prices is also indicating a lack of any glut in supply. Historic low borrowing costs, relatively healthy job market conditions and solid population gains
should continue to support housing demand and residential construction in B.C. and Ontario.

Builder Confidence

Builder confidence is being bolstered by strong resale and new home sales, tight supply and rising home prices. The average price of new single- and semi-detached homes has jumped 15% in Vancouver, and 8% in Toronto, over the past year. To the extent that tight supply is contributing to surging home prices in these two high-priced markets, the increase in new home construction is a welcome development. At the same time, rising unemployment,
inter-provincial population outflows, increased housing supply and a soft pricing environment weigh against a near-term recovery in Alberta, notwithstanding rebuilding activity related to the devastating May wildfires in the Fort McMurray area.

Global Real Estate Housing Markets Remain Strong

Continued low interest rates are driving the key global housing markets, in spite of relatively sluggish economic growth and heightened financial market volatility. The IMF has estimated that roughly three-quarters of global real estate markets are experiencing rising house prices. Strength in general has been predominantly in first world countries compared with emerging markets, though gains are being seen across all regions. Two notable exceptions are Brazil and Russia, where deep local recessions, rising unemployment and high interest rates continue to put significant downward pressure on housing demand and prices. Canada, Australia, Sweden and the U.K. are among the top performing residential markets internationally.

Tightened Lending Rules

The continued and ongoing rapid pace of house price appreciation has prompted authorities to further tighten mortgage lending rules. This includes increased down payment requirements (Canada), higher investor lending rates (Australia), stricter mortgage standards (Sweden) and new taxes on second homes and rental properties (U.K.). U.S. house prices continue to trend up amid strengthening sales and tight inventory. Solid fundamentals — pent up demand, a robust job market and rising household formation — should extend the recovery even in the face of moderately higher borrowing costs.

Affordability

Affordability is still acceptable in most countries surveyed, with average prices still about 20% below the 2008 pre-crisis peak adjusted for inflation, and the U.S. Federal Reserve engineering only a gradual firming in policy. Housing markets also are gradually firming in the euro zone. Average inflation-adjusted house prices across the region edged up 2% over the past year, a modest but defining turning point after several years of decline. However, conditions remain uneven, with strengthening labor markets supporting solid price gains in some member countries, notably Ireland, Spain and Germany, while other markets, including France and Italy, continue to languish alongside a weaker economic recovery.

Latin America and Asia

The majority of property markets in Latin America and Asia are showing moderate activity and price growth. China’s housing recovery is broadening, with roughly two-thirds of major centers reporting annual price growth through April. However, authorities face a tough policy balancing act in their attempt to cool skyrocketing prices in top-tier cities while at the same time support the nascent recovery in oversupplied smaller centers. Foreign capital inflows also are contributing to the recovery in global property markets, as investors search for geographical and asset diversification, and higher potential returns. This extends not just into residential real estate, but commercial properties and agricultural lands as well. A large share of these flows has been destined to the luxury property market in top-tier cities. Global real estate market sentiment remains vulnerable to shifts in the economic and financial climate. Sales of high-end luxury properties have cooled in a number of large markets over the past year, including New York, Hong Kong and London. The softening in demand mirrors the economic slowdowns in China and the Middle East, and deep recessions in Russia and Brazil, all key source markets of luxury foreign buyers. Affordability also is taking on added importance, with relatively lower prices and favorable exchange rate conversions benefiting some second-tier cities, including in Canada, Australia and the euro zone.

Market Predictions for Mississauga – Bull Market Continues

The local Canadian real estate market for 2015 performed exceedingly well, and ended up being the second best year in history. We review the City of Mississauga, a large and diverse suburb of some 760,000 people, located just west of Toronto, and provide a forecast for 2016.

Mississauga is a relatively new area abutting the western edge of Toronto. The City of Mississauga was in fact only created in the 1970’s, when several small villages were incorporated into a new amalgamation. Since that time, Mississauga has grown tremendously, and has become a magnet for people from all over the world, due to its attractive lifestyle, dynamic economy, and welcoming diversity. The real estate market has mirrored that success. During 2015, the market rose 9.5% in prices for freehold properties – i.e. detached properties, semi-detached homes, and freehold townhomes. The condo market, specifically centered around the Square One shopping mall in Mississauga, showed a 6.5% percent increase, still a very substantial rise when you take into account the flood of new condo construction in the area.

Continuing 2015’s Success into 2016

Early signs point to a continuation of last year’s impressive market due to three factors:

Local Sutton Group realtor Randy Selzer provides an explanation of the principles at play here:

There is reason to believe that the three pillars that he talks about are as good an explanation as any, when attempting to understand the strength in the local market. What began as a cyclical bull market in 1996, has surpassed even the most positive market predictions of industry observers, as the real estate market goes from strength to strength. Canada seems to be a magnet for immigration, in spite of its climate, and local real estate markets have benefited from that popularity. Local pundits, having watched the dust settle on 2015, are looking ahead, and they like what they see.

Real Estate Board 2016 Outlook

The Toronto Real Estate Board has published, for the first time, a comprehensive review of 2015 market activity, with an outlook for 2016, covering all aspects of the GTA (Greater Toronto Area) real estate market.

Watch John DiMichele, president of TREB, as he explains the inaugural Market Year in Review & Outlook report. There is a lot of data available in their publication, with forecasts for everything from suburban resale homes, to downtown condos. Two versions exist, one for realtors, and one for the public. Both were released on January 18, 2016.

Report Highlights

The report provides information on the following:

– after a record setting 2015, 2016 is predicted to be a strong real estate market going forward

– house prices will continue to trend upward in 2016

– over 12% of the Greater Toronto Area population are planning on purchasing a home in the next 12 months

– a majority of buyers are planning on putting 10% per cent down or more on their purchase

– includes an extensive section on new home construction

– between 96,500 and 105, 000 home sales are expected to be reported through TREB’s MLS system in 2016.

– indepth analysis of the overall competitiveness of the Greater Toronto Area, and also the Golden Horseshoe Area, are provided

The Toronto Real Estate Board reported 11,303 real estate sales in April 2015. This was the highest sales result on record for the month of April and represented a 17 per cent increase in comparison to April, 2014. While sales increased strongly on a year over year basis, new MLS listings were up over the same period by a more modest five per cent.

Record Real Estate Sales

The record results for real estate sales in April clearly illustrate that a burgeoning number of Toronto area families view home ownership as a priority, high quality long-term investment. This is evidenced by the strong sales growth experienced here in Toronto and the surrounding regions for all major types of housing. First time buyers and existing homeowners remain very active in today’s market.
The overall average selling price, which is a total combined number for all real estate sale for all types of homes reported sold by Toronto area real estate agents in April 2015, was up by 10 per cent year over year to $635,932. The MLS® Home Price Index (HPI) composite benchmark, which estimates the price of a benchmark home with the same attributes from one period to the next, was up by 8.4 per cent during the same timeframe. The fact that average price growth outpaced growth for the MLS® HPI Composite Benchmark, suggests that a greater share of higher priced homes changed hands this year compared to last.

Single Family Homes Strong

No matter which indicator used, price growth in the Greater Toronto Area was strongest for low-rise home types. However, the better supplied highrise condo segment remained healthy as well, with price growth above the rate of inflation. Demand for home ownership was extremely high compared with the number of homes available for sale in April.

Going Forward

The market is not expected to change much as we move through the balance of the year. Until there is a sustained period during which listings grow at a faster pace than sales, annual rates of housing price growth will remain robust.

MID-MONTH REAL ESTATE FIGURES RELEASED
TORONTO, May 19, 2015 – A 9.6 per cent year-over-year increase in home sales was reported by Greater Toronto Area realtors during the first 14 days of May. There were 5,655 sales reported in the first two weeks of May 2015 compared to 5,160 sales during the same period in May 2014. “It is clear that demand for ownership housing remains very strong in the GTA. So much so that, if the pace of sales experienced in the first half of this month is sustained in the second
half, we will see record home sales for the month of May.
The average selling price for transactions reported during the first 14 days of May was $652,782.00 for all home types combined – up by 10.7 per cent compared to the first two weeks of May 2014. The strongest price growth was experienced in the detached market segment, with the average price up by 13.8 per cent. “The low-rise market segments, including detached home sales, have been the driver of average price growth in the GTA this year. As market conditions have tightened, average price growth has remained very strong. However, while tighter market conditions have been a key
factor, so too has been a shift to higher priced homes. Detached sales growth in the City of Toronto, for example, has been strongest for high-end homes. The resulting change in the mix of homes sold has also been an important factor in pushing the average price higher,” said Jason Mercer, TREB’s Director of Market Analysis.

Toronto Real Estate Continues Upward Trend in November

A review of the Toronto real estate market shows that it continues its upward trend, with 6,519 residential transactions reported through the Toronto MLS system in November 2014. Results were up by 2.6% compared to November 2013 sales totals of 6,354 sales. From January through the end of November, total sales reached 88,462 – an increase of 6.6% compared to the same period last year.

While sellers enjoyed year-over-year sales increases, the number of active listings continued to be smaller than expected, with available listings at November’s end down compared to last year.

The Toronto Real Estate Board (TREB) issued a statement that despite the constrained supply of homes for sale, buyers continue to purchase properties with enthusiasm. Home ownership remains an attractive option, as monthly mortgage payments are relatively affordable compared to market rental rates. This combined with the fact that Toronto real estate has proven to be an attractive long-term investment.

Average selling price of $577,936 for November 2014 transactions versus November 2013 was up by 7.4%. The year-to-date average price was up by 8.4% to $567,198.

The strong price growth in Toronto real estate as seen throughout 2014 has been built on a solid foundation, with demand high relative to supply. The triple market drivers of 1.) continued low interest rates 2.) continued immigration into the Greater Toronto Area, and 3.) continuing good economy with ongoing job creation, continue to fuel the ongoing healthy local market. Ongoing competition between prospective buyers has created strong upward pressure on prices – and all these trends appear to be continuing. Unless there is a major shift in the ratio of sales and listings in the Greater Toronto Area, which we do not foresee, rising prices are expected to continue into 2015. Even though prices are at historic highs, the pressure and desirability of home ownership seems to be unabated, and we think that is a good thing for the local Toronto real estate scene, and indeed for the whole Canadian economy.

From stunning lakefront views to great shopping, as well as top notch schools and golf courses, the Toronto suburb of Mississauga offers something for local residents and visitors alike. In 2011 Canadian Money Magazine voted Mississauga as one of the 10 best cities to live in, and it was also ranked as one of Canada’s fastest growing cities just before that.

Mississauga condo

Mississauga has more than doubled in population over the past decade, and the property market has reflected that growth. While areas outside of the GTA have have experienced moderate growth and price appreciation, Mississauga real estate has enjoyed rapid sales, with bidding wars not uncommon. Canada’s stability and its relatively good economic performance has been a magnet for people from all corners of the planet, and today, Mississauga is one of the most multicultural cities anywhere. For anyone planning to make a change and relocate to one of the greatest cities in Canada, Mississauga provides a complete array of amenities, as well as plenty of terrific fine dining and shopping choices. Big city appeal and small town friendship are felt throughout Mississauga, making this a great location to call your new home. Perhaps the biggest centre of activity for shopping is the Square One Shopping mall, which is currently undergoing an extensive expansion.

There are many areas in the city which provide a superior combination of lifestyle and affordability. Erin Mills, for example, was one of Canada’s original master planned communities, and today offers a wide assortment of housing types to suit any budget. For example, today you can find townhomes priced from $350,000, which these days is good value and a terrific opportunity in the pricey Greater Toronto area. At the other end of the price scale, in the Lorne Park subdivision, there are multi-million dollar estate homes bordered by lush greenery, with dense forests, well designed parks, and much more in the area. In the community of Clarkson, there are beautiful, affordable 3 and 4 bedroom semi-detached homes with 3 baths awaiting your family, many with yards big enough large families, and pets. With lovely flora as well as fauna bordering many of the homes south of the QEW highway, you are simply minutes from the lake, as well as close to shopping.

Mississauga Square One Condos

In the Square One area, condo apartments abound, and you can find nice ones on the MLS starting at around $250,000 list price. With the twinkling lights of Toronto in the distance, and with Lake Ontario as a backdrop for many of these 1, 2, and 3 bedroom condos, high rise living in the Square One area has become the choice for thousands of today’s home buyers.

In newer areas of Mississauga such as Churchill Meadows, homes that are less than 10 years old can be found – fully detached, semi-detached, freehold and condominium townhouses are all available.

Small Town Flair, Big Town Festivities

Parts of Mississauga still have some of their original small town flavor, especially in the historic areas such as Port Credit and Streetsville. Local festivals celebrate city life during spring, summer, and fall, and Celebration Square in the Mississauga town centre has a constant stream of events throughout the summer months, with a very popular skating rink in the winter. The real estate market here offers so many choices, no matter what your preferred lifestyle is, and the local people are a happy lot. With Mississauga property offering great value for the price, why not find a home to call your own today?